HONG KONG, Aug. 12 /Xinhua-PRNewswire-FirstCall/ --
Financial Highlights for the Second Quarter of 2008
-- Consolidated revenues increased 31 percent to US$52.5 million from
US$40.1 million in the same quarter in 2007 and decreased 4 percent
from the previous quarter.
-- Consolidated operating income climbed 18 percent to US$11.9 million
from US$10.1 million in the same quarter in 2007 and decreased 8
percent from the previous quarter.
-- Consolidated net income increased 11 percent to US$11.2 million from
US$10.1 million in the same quarter in 2007 and decreased 7 percent
from the previous quarter. GAAP basic and fully-diluted earnings per
share were US$0.21 and US$0.19, respectively.
-- Non-GAAP net income was US$12.1 million. Non-GAAP basic and fully-
diluted earnings per share were US$0.22 and US$0.20, respectively,
which exclude non-cash share-based compensation expenses.
Operational Highlights
-- Solid poker software results despite seasonal slowdown and European
soccer championship.
-- Casino software revenues hit record levels driven by ongoing platform
integration with Everest Poker.
-- Asian online games platform prepares for exciting game launches in
second half of 2008.
Recent Developments
-- World Series of Poker: Everest Poker celebrates record participation in
first year of sponsorship; ESPN broadcasts to give strong boost to
Everest Poker in Q4 and into 2009.
-- NBA STREET Online: GigaMedia partners with EA in China - hot game
licensed for Q4 launch in market where basketball is #1 sport.
GigaMedia Limited (Nasdaq: GIGM) announced today strong second-quarter
results with revenues rising 31 percent to $52.5 million, and operating income
growing 18 percent to $11.9 million, both in comparison to second quarter
2007, driven by sharply increased contributions from its online games business
in China and continued solid growth in its poker software business in
continental Europe.
Net income was US$11.2 million, up 11 percent year-over-year and down 7
percent sequentially over the first quarter of 2008 on seasonality. Second-
quarter 2008 non-GAAP basic and diluted earnings per share were $0.22 and
$0.20, respectively, which exclude non-cash share-based compensation expenses.
'We delivered solid results in the second quarter despite a difficult
operating environment,' stated GigaMedia Limited Chief Executive Officer
Arthur Wang. 'Looking forward, Everest Poker's sponsorship of the World Series
of Poker, ever stronger casino software results, and new game launches in Asia
should ensure strong growth and momentum in the second half.'
'In addition, our new Everest Sports-betting offering will launch in Q4
and drive growth from the strong crossover and tie between poker players and
sports bettors,' stated CEO Arthur Wang.
'Our new partnership with EA to run NBA STREET Online in China
consolidates our position as the top sports game operator,' stated President
Thomas Hui. 'We plan to make NBA STREET Online the No. 1 sports game in China,
drawing from the country's 300 million basketball fans.'
Consolidated Financial Results
GIGAMEDIA 2Q08 CONSOLIDATED FINANCIAL RESULTS
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
all figures (%) (%)
in US$
thousands,
except per
share amounts)
Revenues 52,468 40,063 31 52,468 54,629 -4
Gross Profit 40,845 31,798 28 40,845 43,149 -5
Operating
Income 11,912 10,091 18 11,912 12,907 -8
GAAP Net
Income 11,200 10,078 11 11,200 12,077 -7
GAAP Net
Income Per
Share, Diluted 0.19 0.17 10 0.19 0.20 -7
Non-GAAP
Net Income (A) 12,139 10,332 17 12,139 12,813 -5
Non-GAAP
Net Income
Per Share,
Diluted (A) 0.20 0.17 17 0.20 0.21 -5
EBITDA (B) 13,037 11,326 15 13,037 13,929 -6
Cash, Cash
Equivalents
and Marketable
Securities-
Current 81,655 72,373 13 81,655 79,923 2
(A) Non-GAAP net income and non-GAAP net income per share exclude non-
cash share-based compensation expenses. (See, 'Use of Non-GAAP
Measures,' for more details.)
(B) EBITDA (earnings before interest, taxes, depreciation, and
amortization) is provided as a supplement to results provided in
accordance with U.S. generally accepted accounting principles
('GAAP'). (See, 'Use of Non-GAAP Measures,' for more details.)
Consolidated revenues for the second quarter increased 31 percent to $52.5
million from $40.1 million in the same period of 2007, and decreased 4 percent
from a record $54.6 million in the first quarter of 2008. Year-over-year
results reflected strong organic growth in the company's core businesses, led
by a 26 percent increase in Gigamedia's gaming software business and a 67
percent revenue increase in the company's Asian online games business.
Quarter-over-quarter revenue variation reflected the impact of a seasonal
downturn in the gaming software business combined with a reduction in player
activity due to the popularity of the 2008 European Football Championship in
the second quarter of 2008, as well as comparison with exceptionally strong
results in the first quarter in the company's Asian online games business
which surged on heavy player activity in the period related to product
promotions, the Chinese New Year holiday, and poor weather.
Consolidated gross profit for the second quarter increased 28 percent to
$40.8 million from $31.8 million in 2007 and decreased 5 percent quarter-over-
quarter from $43.1 million. The year-over-year improvement was driven by
accelerating contributions from the Asian online games business, whose gross
profit grew 58 percent from the same period in 2007, and continued solid gross
profit growth in the gaming software business. The quarter-over-quarter
decrease in gross profit was due to quarterly sequential gross profit
decreases in the company's core businesses. Second-quarter consolidated gross
profit margin was 77.8 percent, down slightly from 79.4 percent a year ago and
79.0 percent in the previous quarter.
Consolidated operating income for the second quarter grew 18 percent year-
over-year to $11.9 million from $10.1 million in the second quarter of 2007
and decreased 8 percent quarter-over-quarter from a record $12.9 million in
the first quarter of 2008.
Driving the year-over-year increase in consolidated operating income was a
strong 37 percent increase in operating income in the Asian online games
business, combined with an 8 percent increase in operating income in the
gaming software business. GigaMedia's consolidated operating margin in the
second quarter of 2008 was 22.7 percent compared with 25.2 percent in the same
period in 2007. Second-quarter 2008 consolidated operating margin was affected
by lower operating margins in the gaming software and Asian online games
businesses versus the same year-ago period.
Quarter-over-quarter consolidated operating income results reflected the
impact of seasonality on the company's core businesses with expected modest
decreases in operating margins in the second quarter of 2008 from 23.6 percent
in the first quarter. Second-quarter consolidated operating margin was
impacted by lower consolidated revenues and gross margin and higher product
development and engineering expenses.
Consolidated non-operating income during the second quarter of 2008
totaled approximately $165 thousand, down from non-operating income of
approximately $510 thousand a year ago and $501 thousand recorded in the
previous quarter.
Consolidated net income for the quarter increased 11 percent to $11.2
million from $10.1 million in 2007, and decreased by 7 percent from the
previous quarter. GigaMedia's GAAP fully-diluted earnings per share in the
second quarter grew 10 percent to $0.19 versus $0.17 in the same period in
2007 and decreased 7 percent from the first quarter.
GigaMedia also reports non-GAAP financial measures, including non-GAAP
consolidated operating income, non-GAAP consolidated net income, non-GAAP
basic and fully-diluted earnings per share, and consolidated EBITDA. The non-
GAAP measures are described below and reconciliations to the corresponding
GAAP measures are included at the end of this release. (See, 'Use of Non-GAAP
Measures,' for more details.)
Non-GAAP consolidated operating income, non-GAAP consolidated net income,
and non-GAAP basic and fully-diluted earnings per share all exclude non-cash
share-based compensation charges. Second-quarter non-cash share-based
compensation charges were $1.0 million, up from $767 thousand in the first
quarter.
Non-GAAP consolidated operating income was $12.9 million in the second
quarter of 2008, up 24 percent year-over-year and down 6 percent quarter-over-
quarter. Non-GAAP consolidated net income in the second quarter was $12.1
million, representing an increase of 17 percent over the same period last year
and a 5 percent decrease from the first quarter of 2008. Non-GAAP basic
earnings per share were $0.22, a 12 percent increase from 2007 and a decrease
of 6 percent quarter-over-quarter. Non-GAAP fully-diluted earnings per share
were $0.20, a 17 percent increase from the same period last year and down 5
percent compared with the first quarter.
Consolidated EBITDA for the second quarter of 2008 grew 15 percent to
$13.0 million versus the same period last year, and decreased 6 percent from
the first quarter of 2008. Operating cash flow for the second quarter of 2008
was $11.4 million. Capital expenditures totaled $4.5 million for the period.
GigaMedia continued to maintain a robust balance sheet. Cash, cash
equivalents and marketable securities-current were $81.7 million, up from
$79.9 million in the first quarter of 2008. Total loans remained roughly flat
and amounted to $32.3 million at the end of the second quarter of 2008.
Business Unit Results
GigaMedia Limited conducts its online entertainment business in two
business segments. The gaming software segment develops and licenses online
poker and casino gaming software solutions and application services, primarily
targeting emerging continental European markets. The Asian online games
segment operates a suite of play-for-fun online games, mainly targeting online
gamers in Greater China. A third segment, other business, consists of
GigaMedia's legacy broadband ISP operations in Taiwan.
Gaming Software Business
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
in US$ (%) (%)
thousands)
Revenues 36,889 29,221 26 36,889 38,301 -4
Gross Profit 31,066 25,171 23 31,066 32,754 -5
Operating Income 10,380 9,652 8 10,380 11,515 -10
Net Income Before 10,245 9,386 9 10,245 11,503 -11
Minority Interests
Net Income 10,304 9,216 12 10,304 11,396 -10
EBITDA 10,878 9,432 15 10,878 11,913 -9
The gaming software business delivered solid results despite entering the
seasonally quiet summer period for online gaming activity and facing strong
entertainment challenges from the 2008 European Football Championship, which
began in June. Cross-selling between poker and casino is on track and driving
growth. On the back of Everest Poker's sponsorship of the World Series of
Poker, GigaMedia's Everest Poker and Everest Casino products are well
positioned to sustain long-term growth.
Second-quarter revenues in the gaming software business increased 26
percent year-over-year to $36.9 million from $29.2 million and decreased 4
percent quarter-over-quarter from a record $38.3 million.
GigaMedia's revenues from the gaming software business derived from
providing poker and casino software and services to its master licensee were
$17.0 million during the second quarter of 2008. This represented an increase
of 34 percent from $12.7 million in 2007 and a 1 percent increase from the
first quarter of 2008, which totaled $16.9 million.
